European PA players unfazed by Arkema's plans to close PA plant

20 September 2013 20:31 Source:ICIS News

LONDON (ICIS)--European phthatlic anhydride (PA) players remain unfazed by Arkema’s plans to close its PA facility at Chauny in France, but the closure may lead to issues in the UK in the near future, market sources said on Friday.

Even prior to the final decision, which came late on Friday when Arkema announced that it would close its PA and downstream dioctyl phthalate (DOP) facilities in Chauny in France by March 2014, most PA players considered it to be a foregone conclusion that it would take place.

“It is not a surprise! I was expecting it due to Arkema’s big DOP exposure,” said one PA producer. DOP is being phased out in Europe for legislative reasons, and PA is a feedstock for DOP.

European PA buying and selling sources considered that Arkema’s exit out of the PA market would help to balance it out, provided demand remains steady, as the European PA market is considered to be structurally oversupplied.

Some players estimate that that the European PA market is oversupplied by around the same amount as the nameplate capacity at Arkema’s Chauny plant.

The structural oversupply in the European PA market has been linked to the phasing out of main derivative DOP, as well as the fact that downstream demand in the main plasticizers and unsaturated polyester resin sectors has been affected by the fragile economic climate over the last few years.

One PA producer said that the closure of the Arkema’s Chauny PA plant would mean one player less to compete with.

One trader in the UK, however, considered that Arkema exiting the PA market could be problematic for the UK as Arkema is one of the main exporters from Europe to the UK. The trader said that alternative solutions need to be found and the gap needs to be filled, particularly as Arkema is believed to have downstream resin operations in the UK as well. However, the latter has not been officially confirmed.

By Heidi Finch